Challenge
Small and landlocked, Rwanda is hilly and fertile with a densely packed population of about 12.5 million people (2018). The country’s recent growth and poverty reduction experience has been remarkable. Two decades ago Rwanda was one of the poorest countries in Sub-Saharan Africa; today its per capita income (around $800 as of 2018) places it ahead of more than 20 countries in the region thanks to the second highest economic growth rate on the continent. Poverty rates defined by the international poverty line of $1.90 a day have fallen from 77.2% in 2001 to 55.5% in 2017. Yet the challenges of reducing extreme poverty and increasing shared prosperity are enormous. Poverty has been less responsive to growth than in other strong performers on the continent. While Rwanda has made strides in human development, particularly in areas such as health and gender equality, its Human Capital Index of 0.37 is below other comparable income level countries, mainly due to a high level of under-five stunting rates (38%), a high dropout rate, and poor quality of learning. Thus, a critical priority for Rwanda is ensuring that growth is pro-poor.
Approach
Rwanda’s success stories in accelerating poverty reduction over the last decade is intertwined with a long-lasting World Bank engagement in Social Protection in Rwanda. The World Bank supported Rwanda’s Social Protection Flagship Vision 2020 Umurenge Program (VUP) from its infancy in 2009 through three Development Policy Operation (DPO) series, with a total funding of around USD 500 million. The DPO series which ended in December 2017 contributed to establishing a strong foundation for overall Social Protection policies, targeting and Management Information System (MIS), adoption of delivery systems and building up institutional capacities.
Following successful DPO series, the World Bank continues its support to the Social Protection sector through a new lending instrument, the Investment Project Financing (IPF). The project aims at improving efficiency, strengthening accountability and transparency, and introducing new Social Protection interventions to boost Human Capital, particularly in relation to the ambitious nutrition and Early Childhood Development Government goals. These interventions are supplemented by several additional resources mainly in the form of Analytical Work and Technical Assistance to reinforce the evidence base and promote learning and institutional strengthening in key areas (Early Childhood Development, Nutrition, livelihoods enhancement, Monitoring and Evaluation) of the overall program. Through the Conditional Cash Transfer (CCT) component of IPF, the project incentivizes the uptake of the health and nutrition services (demand side) while another complementary project, the stunting reduction project ensures availability and quality of those services (supply side).
Results
Through a series of social protection support programs, the Bank has helped to improve the effectiveness of Rwanda’s social protection system, notably the Vision 2020 Umurenge Program (VUP), for targeted vulnerable groups.
- Since the VUP’s inception in 2008, more than 2,200 projects have been implemented under its public works component, which has employed more than 800,000 households, and generated more than 40 million paid working days.
- The classic public works program grew from 30 sectors with 18,304 households in 2008 to 244 sectors (out of 416 sectors in the country) and is currently benefiting 133,102 households of which over 50% are female headed.
- The gender and child sensitive Expanded Public Works component which offers flexible year-round work schedule to moderately labor-constrained households particularly those caring for young children and other dependents, was introduced in 2016/2017. It currently covers 150 sectors with 22,583 households, more than 72% of which are headed by women.
- The direct support (cash transfers) grew from 6,850 households in 2009, to cover the entire country with 107,106 households as of April 2019
- Overall, different components of VUP benefit more than one million individuals in all the targeted households.
Bank Group Contribution
International Development Association (IDA) is Rwanda’s largest provider of official development assistance. As of September 2, 2019, the World Bank Group's portfolio in Rwanda consisted of 16 national projects with a net commitment of $1,249.77 million. Rwanda also participates in five regional projects worth a national commitment of $255.25 million. Project objectives have ranged from providing access to basic infrastructure and enhancing urban management in selected urban centers, supporting the strengthening of the social protection system, reducing stunting, and providing electricity to rural households. The World Bank has provided more than half a billion dollars in IDA funding to the social protection sector since its inception in 2008, through both Development Policy Lending and Investment Project Financing. Additionally, in the framework supporting human capital challenges, the World Bank is leveraging the investments already made in social sectors through new IDA funding and grants commitments close to half a billion in education, health and cross sectoral development policy lending for human capital.
Additionally, the International Finance Corporation -IFC’s program in Rwanda covers four main areas; capital and financial markets development; infrastructure and natural resources; manufacturing, agribusiness and services, as well as investment climate reform. As of June 2019, IFC’s investment portfolio is worth $70 million and $14 million in advisory services. To further encourage investment, IFC co-hosted the Africa Chef Executive Officers (CEO) Forum on March 25-26, 2019 and is working to bring investors from around Africa and the world to look closer at investing in Rwanda. IFC recently concluded the country private sector diagnostic and have identified agribusiness and housing as its priority focus areas going forward. The Multilateral Investment Guarantee Agency (MIGA) currently has one active project, KivuWatt, with a total gross exposure of $95.4 million.
Partners
World Bank coordinates with other development partners (the United Nations and other multilateral and bilateral agencies) in the country through the formally established framework, the Development Partners Coordination Group (DPCG). The division of labor between development partners as established by the Government of Rwanda in 2013 supports and eases inter-development partners’ coordination, alignment and harmonization. In each sector of intervention, the World Bank is a member of the sector working group and technical working groups within the sector.
Specifically, in the social protection and health sectors, IDA financing is currently supplemented by grant funding from the Power of Nutrition and the Global Financing Facility (GFF) to finance an integrated program to combat chronic malnutrition, with a focus on districts with high-stunting rates, vulnerable populations, and the critical 1,000 days beyond which stunting becomes largely irreversible. The Power of Nutrition provided $35 million (including from the private sector), and the Global Financing Facility contributed $18 million to the overall program to supplement $80 million of IDA funds. The World Bank coordinates mainly with United States Agency for International Development (USAID), United Nations International Children's Emergency Fund (UNICEF) and Department for International Development (DFID) on this program.
Moving Forward
The World Bank Group’s Country Partnership Strategy with Rwanda will end in Financial Year 20 (FY20). Preparations for the new Country Partnership Framework (FY21-FY25) is currently underway and draws on the WBG Systematic Country Diagnostic conduced in 2019 and the joint Rwanda /WBG report on the future drivers of growth and the National Strategy for Transformation. These documents identify investing in human capital, developing markets and the private sector, investing sustainably, and building resilience as the priority areas for Rwanda to ensure sustainability of economic growth, poverty reduction and shared prosperity. The upcoming World Bank Rwanda Country Partnership Framework will jointly identify areas of future stronger engagement.
Beneficiaries
- Mukagasana Gaudance, 49, lives in Nduba sector of Gasabo District. She graduated from the VUP’s public works program, one of the components which provides paid employment to able-bodied adults from extremely poor households. She also benefited from training in basic financial education, business development and management skills: “To me, the training is the most important asset I got from the program,” she said. “It instilled in me a sense of confidence, opened my eyes to the many available services and opportunities, and taught me how to use them to improve my life.” She added. “I can confidently say I am now financially independent and feel secure. I know I can take care of myself and my family.” Two of her children are in college.
- 83-year-old Eduard Nkundiye lives with his wife and grandchild in the Nyamagabe district. He is one of the beneficiaries of Direct Support, a VUP component which supports the poorest households that are unable to work: “At first I got RWF 60,000, which I used to buy a piglet. It grew up and later gave me six more. I sold them and bought a cow which gives us milk and manure for my vegetable garden,” he said.